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Olaf Scholz's attempt to spread optimism against the trend

Olaf Scholz's attempt to spread optimism against the trend

Federal Minister for Finance Olaf Scholz (SPD) and President Jens Weidmann of the Bundesbank see no reason for crises and black-and-white crises. At the annual meeting of the International Monetary Fund (IMF) and the World Bank, the meeting with colleagues from the top 20 industrialized and emerging markets (G20) both points to the growth rate of the world economy, albeit more slowly.

"However, there are risks that are easy to name," Scholz said on Friday in Bali, noting trade disputes and the increasing debts of the world. Although Weidmann was convinced, but acknowledged, "that the risks at the bottom are greater than".

According to the President of the Bundesbank, the IMF reduced its forecast for global economic growth from 3.9% to 3.7% for 2018 and 2019, partly because of the situation in Argentina and Turkey. But only the home-made problems are the cause of the crisis. But Weidmann also refers to the rising oil price and trade disputes. The boss of the Bundesbank – who regards the recent exchange losses on the stock market as a correction and not as a sign of a crisis – sees no consequences afterwards. "I am relaxed." In general, growth in the industrialized countries remains robust.

According to calculations by the Bundesbank, the sanctions imposed so far will weigh world trade by one percentage point and lead to a weakening of growth in the United States and China of 0.5 percentage points each. But Scholz and Weidmann warn of an escalation of the trade dispute. This would have serious consequences, as all participants at the meeting in Bali knew. After all, in view of the trade dispute between Europeans and the US, the Minister of Finance speaks of "reliable and reasonable talks".

China is not mentioned, but criticized

His American colleague Steven Mnuchin criticized the IMF in the Indonesian location Nusa Dua. In his opinion, the fund does not indicate that some of the 189 Member States used unfair trading and trade practices. He did not call China directly, but it was clear that the Chinese were meant. A rapprochement between both sides is not recognizable in Bali.

Italy was also the focus of the discussion on and in the margins of the annual meeting with a view to the planned high government expenditure. However, Scholz spoke with restraint and warned against exaggerated teachings. If you want to give advice, he says, "Be careful what you do." In general, there is agreement at international level that a country with particularly high debts must be cautious. Italian politicians had agreed to abide by the European rules. Weidmann recalled the close embrace of Italian banks with the state about the high share of Italian government bonds in their books. One must take care of these risks.

Other high-ranking European experts also warned in Bali to dramatize the situation in Italy. The country is not yet approaching the end. There is a surplus on the current account, the private savings per head of the population are considerably higher in Italy than in Germany. Italy still has access to the capital markets. The country did not need money from abroad, was heard in Bali. From Italy there is no risk of infection for other euro countries. "This is an isolated case," said a senior expert.

The rules of the Paris Club are not respected

By the way, in China, Nusa Dua not only discusses the trade dispute, but also talks about African countries with its billions of loans. Although Scholz did not explicitly mention the Chinese, he said: "Our idea is that as many countries as possible adhere to the rules of the so-called Club of Paris." The Club of Paris, with its 22 member states, applies the same rules for public lending and seeks relief in times of crisis solutions. China is not one of them and does not feel bound to credit and debt rules.

The conditions for Chinese loans are not transparent and can, as Scholz fears, bring emerging and developing countries into over-indebtedness. Similar comments were made by other experts. Of course, China also demands interest on its loans. African states are increasingly criticizing financing from the Middle Kingdom, because this would increase the debt of the countries.